California Small Business Insurance. If you own a CA small business, this article will help you understand some the of most common policies available. Commercial insurance helps protect your business and potentially your personal assets from lawsuits and settlements that can reach into the millions.
Having high enough limits in your commercial liability coverage should be a cornerstone of any business plan in the Golden State. Carrying adequate California small business insurance to protect your business shouldn't be a question - it's a must if you want to make sure that you don't get put in a position where you have to lose your business or pay money out of pocket to cover expenses associated with a loss.
Learn about California small business insurance requirements, costs and coverages including: Commercial General Liability, Commercial Property Insurance, CA Workers Compensation, Business Owner's Policy (BOP), Errors & Omissions (professional liability), CA Commercial Auto Insurance and more.
You can skip to the following types of California small business commercial insurance using these links:
California only requires two types of commercial insurance policies - and only under specific circumstances:
Any other policies and coverages are optional for the business to purchase. There is not one small business insurance policy that covers every risk. There are different commercial insurance policies that cover various accidents, damages and lawsuits that could financially devastate a small business without the right protection. Some of the most common risks businesses face are covered in these policies.
California does not cap rewards for liability law suits and business owners should invest in this type of coverage. It is important to note that CA state courts have a reputation for awarding large liability judgments against businesses, and an injured part has up to two years to file a claim. This means businesses may be sued many months after an accident occurs.
Following is a list of the main factors that determine the costs of small business insurance in CA:
California small business insurance needs, costs and coverages are different for each industry and CA region. While not an exhaustive list, to properly protect your business against lawsuits - consider these additional policies that fall under commercial property and/or casualty insurance:
The person injured in an auto accident may be a young child, a wage earner, a surgeon, or a homeless person. The costs of the accident may be relatively small or run into the millions of dollars, depending on the victim and his or her injuries. California commercial auto insurance helps protect your business if you hurt a person or damage their property.
What Is Covered - California business auto insurance protects your assets in several ways:
To summarize, commercial auto is coverage for vehicles and their drivers owned by the business and/or used for business purposes, and covers these common claims:
California small business insurance offers coverage for business property and casualty exposures. Wouldn't it be great if you could get most or all of them in just one policy? If you qualify, the Business Owners Policy (BOP) may be exactly what you're looking for. This single package covers your buildings and business personal property, as well as liability imposed on you because of your premises, operations and products. In addition, it has numerous coverage extensions and optional coverages available.Business Liability Coverage
Much like a general liability policy, the liability coverage offered by a BOP:
Buildings can be more than just a single building. The structure listed and described that has a limit of insurance on the declarations is covered, along with the following:
Business personal property (BPP) is more than just the contents of a building. The following business personal property is covered when a limit of insurance appears on the declarations and when it is in the described building and within 100 feet of the premises or building while in the open or in or on a vehicle:
To summarize, a Business Owners Policy (BOP) packages general liability and commercial property into one policy, and covers these common claims:
You don't have any control over the ultimate cost of injuries to a person injured because of your operations, products, or services. The person injured may be a toddler, a contractor, an accountant, or a homemaker. The cost of the injuries may be comparatively minor or run into the millions of dollars, depending on the person and the extent of his or her injuries. This is why you need the right amount of California small business insurance.
Commercial general liability insures the bodily injury liability, property damage, and personal and advertising injury liability exposures of a variety of commercial businesses, enterprises, and ventures.
What Is Covered - California general liability insurance protects your assets in several ways:
Each of these California small business insurance coverages is subject to certain policy exclusions, conditions, and definitions. Following a few examples of how a CGL policy can cover third-party bodily injuries, third-party property damage, and advertising injuries;
To summarize, general liability is typically required for most commercial leases, and covers these common claims:
The primary goal of any California small business insurance program is to protect the insured's real and business personal property. Tangible property usually represents a significant portion of its total assets, regardless of the size of the business.
Protecting your real and personal property is an important element of your insurance program. No matter the size of your business, a large percentage of your assets and resources are tied directly to your property. A commercial property program can provide the coverage you need if a loss should occur.Covered Building
When there is a limit of insurance for building on the declarations, the building or structure listed and described is covered property. The following is also considered covered building property:
When there is a limit of insurance for personal property on the declarations, coverage applies to the following property if it is inside the building or structure at the designated premises. It is also covered if it is outside the building or structure but within 100 feet of the building or premises. Such personal property outside can be either in the open or in or on a vehicle.
Personal property of others is covered when there is a limit of insurance on the declarations but only when:
To summarize, commercial property insurance covers these common claim types:
Do you own, operate, or manage a business which includes at least one employee? Are you familiar with the laws of California regarding workers compensation insurance coverage? The Workers Compensation and Employers Liability Insurance Policy covers your statutory liability as an employer under CA workers compensation laws. It pays for medical treatment because of injuries and indemnity payments for employees disabled by work-related accidents. It also provides tort liability coverage for legal actions brought against you for bodily injuries to your employees that fall outside state workers compensation laws.
The California small business insurance coverages provide the benefits that the law requires for injuries employees sustain that arise out of and in the course of their employment, including resulting disease or death, subject to certain policy terms and conditions. In addition, if the employee injury is not compensable under applicable state workers compensation laws or occupational disease acts, Employers Liability Insurance responds to the employee's allegation of negligence by you, again subject to certain policy terms, conditions, and exclusions.
California has laws that require such protection for workers and those laws prescribe the amount and duration of the benefits provided. Employers Liability covers an employer's common law or tort liability for employee injuries that fall outside the scope of the state laws or acts. This liability is separate and distinguished from the liability that workers compensation laws impose.
The policy provides the mandatory benefits that the various CA laws prescribe and require for accidental work-related injuries that occur in the course of employment, subject to its terms and conditions. It must be emphasized that the injury must arise from and be related to the injured worker's job duties. Coverage also applies to the related costs for disease or death that occur as a result of the accident.
There are times when the employed worker's injury is not compensable under workers compensation or occupational disease laws. In those cases, Employers Liability coverage responds to the injured worker's allegations of negligence on the employer's part, subject to its terms, conditions, limitations, and exclusions. The coverage the basic policy provides may be broadened, restricted, clarified, or made to comply with specific state regulatory requirements by using a variety of available endorsements.
To summarize, workers compensation is required if businesses has any employees, even one part-time (in most states), and covers these common claims:
Professional liability insurance, also known as errors and omissions (E&O), is a type of liability coverage that protects your company against claims that a professional service you provided caused your client to suffer financial harm due to mistakes you made (errors) or because you didn't perform some service (omissions).
Professional liability can cover the legal costs of defending your company in a civil lawsuit and some damages if awarded, even if you haven't made a mistake. Eamp;O coverage is not included in a general liability insurance policy.
If your business:
you should probably purchase an errors and omissions policy. Common claims that E&O covers are negligence, misrepresentation, violation of good faith and inaccurate advice.
In the medical and legal professions, professional liability is called malpractice insurance.
To summarize, professional liability insurance helps protect professionals against liability incurred as a result of errors and omissions in performing their professional services, and covers these common claim types:
Accidents are unpredictable. Some accidents are very small. Others trigger catastrophic events in the lives of the injured parties. Are your policy limits sufficient to protect you if a person you injure must have multiple lifesaving surgeries or requires around the clock care for the rest of her life? If not, your business capital could be required to make up the difference.
Commercial liability umbrella is a stand-alone coverage that contains its own coverage, exclusions, and conditions. It provides excess limits over General Liability, Automobile Liability, Employers Liability, and other underlying liability coverage forms or policies. In addition, and because it is a stand-alone coverage form, it may include coverage that underlying coverage forms or policies do not include or provide.
To summarize, commercial umbrella is excess liability coverage that 'extends' the limits of a general liability and/or other liability policies, and offers:
The law in CA requires businesses to notify any California residents when an unauthorized person accesses unencrypted personal information. Cyber liability insurance helps your business deal with the costs of data breach and recovery by helping to pay for:
To summarize, cyber liability helps cover a business' liability for a data breach in which their customers' personal information is exposed or stolen by a hacker or criminal, and covers these common claims:
Corporate directors and officers (D&O) have a duty to manage the company in their stockholders' best interests. They are bound to use due care and to be diligent in respect of the management and administration of the corporation's affairs and in the use of its property and assets. Accordingly, they are liable for losses or injuries that are caused by their breach or neglect of duty.
Recognizing the need to have competent directors and officers on executive boards, many corporations have put in their by-laws or charters certain resolutions undertaking to indemnify their directors and officers for legal expenses incurred by them in defending suits based on alleged wrongful acts in their capacities as directors and officers. Such indemnification provisions are permitted by most states' laws. Protection varies from state to state. In general, state statutes do not protect directors from claims brought by governmental agencies, or claims alleging violations of securities and exchange laws or other federal laws.
To summarize, directors and officers is a type of liability insurance that covers individuals for claims made against them while serving on a board of directors and/or as an officer, and covers these common claims:
Commercial property coverage forms specifically exclude most types of equipment breakdowns while the Equipment Breakdown Protection Coverage Form Insures only equipment breakdown - which covers loss or damage to your covered property that results when covered equipment breaks down.
This coverage includes inspection service as a part of the basic coverage because you can eliminate most equipment breakdowns with proper maintenance. These inspections also satisfy any obligation you have to conduct required governmental or statutory inspections.Covered Equipment
Four types of equipment you may own or operate can be covered:
This California small business insurance coverage also applies to your computer equipment, communications equipment, and equipment that generates, transmits, or uses energy.
To summarize, equipment breakdown is coverage for losses due to mechanical or electrical breakdown of nearly any type of equipment, and covers these common claims:
The current level of workplace morale, the state of the economy, and legislation such as the Americans with Disabilities Act and the Family Medical Leave Act have all led to a marked increase in employment-related practices claims and lawsuits. Because these legislative and other legal changes have provided significant incentives for employees to file employment-related claims, employers such as you should be more aware of your susceptibility to such actions.
Employment-Related Practices Liability Coverage provides broad insurance protection from employment-related practices claims and lawsuits that are brought against your company, managers and directors and officers. It covers such things as age and gender discrimination, sexual harassment, wrongful discipline and termination and negligent decisions involving hiring, promotion, and compensation. It also applies to breach of employment contract, employment-related emotional distress, and mental anguish, invasion of privacy, libel, and slander.
Claims can come from both current and former employees and even from job applicants you didn't hire! The procedures that you use or don't use in hiring, firing and managing your employees can translate into huge defense costs and legal awards to plaintiffs for your errors or oversights even if they were unintentional.
Allegations are made by employees who claim to have suffered various types of financial loss or emotional injury because of their employers' acts (or failure to act). The list of allegations involves wrongful termination, demoting an employee without justification, failure to hire or promote a worthy employee, unwarranted discipline or abuse (particularly sexual harassment).
Many of these offenses are said to be the result of illegal discrimination on the basis of age, gender, religion, race, nationality, or sexual orientation. Other offenses are claimed to be a violation of the individual's civil rights, or the failure to accommodate a mental or physical limitation or disability.
Sexual harassment by the employer's management or supervisory staff, or by fellow employees, has grown to include allegations of same-sex harassment. In addition to injuries involving sexual abuse, physical, mental or emotional abuses are also being claimed with more frequency.
To summarize, Employment practices liability is coverage for claims made by workers that their legal rights as employees of the company have been violated, and covers these common claims:
Most theft losses are comparatively small, fall under the deductible, are excluded, or are uninsured. However, larger ones can put a company out of business as quickly as an uninsured fire. California small business insurance - specifically business personal property coverage forms and policies written on an All Risks or Special Causes of Loss basis usually cover theft of property and merchandise by outside parties.
However, they usually exclude losses due to employee dishonesty, theft of money and securities, computer fraud, safe burglary, extortion, and related criminal acts. This is why every CA business needs a sound program of crime coverages for employee theft and other types of criminal and fraudulent activities.
Types Of Coverage - The ISO Commercial Crime Coverage Form offer seven types of protection:
To summarize, commercial crime insurance is coverage for any dishonest acts of your employees including damage to your property, fraud or theft of a customer's property, and covers these common claims:
All of California Department of Insurance's (CDI) functions, including overseeing insurer solvency, licensing agents and brokers, conducting market conduct reviews, resolving consumer complaints, and investigating and prosecuting insurance fraud, are to protect consumers.
Accoring to the California Department of Insurance, "Commercial insurance can protect you from some of the most common losses experienced by business owners such as property damage, business interruption, theft, liability, and worker injury. Purchasing the appropriate commercial insurance coverage can make the difference between going out of business after a severe loss or recovering with minimal business interruption and financial impairment to your company's operations."
The California Department of Insurance also publishes a guide for commercial insurance - get it here:
Read informative articles on small business commercial insurance including costs and coverages.
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